The 1970s – The Beginning of Microprocessor and Personal Computer Era:

The enabling technology for the personal computer is the microprocessor (popularly known as microchip). These processors were actually integrated circuits, which printed thousands of transistors onto small silicon chips. The first integrated circuits were produced in 1962 for the military and they cost about $ 50 and contained an average of half a dozen active components per chip. After that, the number of components on a chip doubled every year. By 1970, it was possible to make LSI (Large Scale Integration) chips that contained thousands of active components in the chip (Freiberger and Swaine, 1984).

In 1968, a firm called Intel was established to commercially produce these integrated circuits. Initially, it marketed its integrated circuits to calculators, watches and games which in fact revolutionized these industries. In 1969, while designing an integrated circuit for a new scientific calculator for a Japanese manufacturer, Intel engineer Ted Hoff came up with the idea to design a general purpose chip in which specific calculator functions can be performed. Eventually, Intel started to market them in November 1971, under the brand name Intel 4004, a 4-bit microprocessor, selling for $ 1,000 (Slater, 1987).

In 1973, Intel replaced the 4004 with an 8-bit version under the brand name Intel 8008. By this time, several manufacturers also had begun to produce their own microprocessors – such as the Motorola 68000, the Zilog Z80 and the Mostek 6502. With this competition, the price of the microprocessor fell to around $ 100 (Veit, 1993).

In January 1975, the first microprocessor-based computer, the Altair 8800 was introduced. It was essentially a kit for hobbyist, sold by mail order as a kit for about $ 400 and a few-hundred more already assembled. It contained an Intel 8080 microprocessor produced by Micro Instrumentation Telemetry System (MITS) in Albuquerque, New Mexico. It had no display, no keyboard and not enough memory to do anything useful. The only way the Altair could be programmed was to enter programs in pure binary code by flicking the small hand switches on the front, a situation reminiscent of the early computers of the 1940s. When loaded, the program would run; but the only sign of the execution of the programs was the shifting patterns of the neon bulbs on the front. It had very little that could be considered truly useful for a user. But, it was dreams come true for some computer hobbyists if they are so dedicated to keep flickering the switches (Ferguson and Morris, 1995).

The limitation of the Altair actually came as a boom to many small-time entrepreneurs and computer buffs, as it gave an opportunity to develop add-on features and boards so that extra memory, teletypes and audiocassette recorders (for permanent data storage) could be added to the basic machine. Another group of people thought that they could make Altair more usable by developing software for it.

The news of the introduction of Altair in the market made these computer buffs and entrepreneurs immediately jump into the opportunities of adding-on hardware and writing software. In 1975, two of these computer buffs Bill Gates and his childhood friend Paul Allen decided to write BASIC, in order to take advantage of these opportunities. They decided to develop BASIC language for Altair. After obtaining the permission from Ed Roberts, the owner of MITS, Bill Gates and Paul Allen formed a partnership which they named Micro-Soft (the hyphen was dropped later). After six weeks of intense programming effort, they delivered a BASIC programming system to MITS in February 1975. They refused to sell it to MITS though; rather they licensed it in return for a royalty. The Altair 8800 and the add-on boards and BASIC software transformed electronics as the computer hobbyists showed strong enthusiasm. During the first quarter of 1975, MITS received $ 1 million in orders for Altair. The royalty from this provided a substantial cash flow for Microsoft, then only a tiny company (Veit, 1993). The royalty concept as providing regular cash flow reinforced Bill Gates’ mind regarding its advantage and in future negotiations with others he would stick to this position, as he would be in the 1980s with his negotiations with IBM. Since 1975, the personal computer industry saw rapid expansion. The peripherals such as keyboards, disk drives and monitors were added to the bare-bone Altair models. There were also several Altair clones that began to appear in the market.

In 1976, the first operating system for these Intel-based personal computers was written by a system programmer named Gary Kildall. As a consultant for Intel, he developed an operating system called CP/M (Contro Program for Micros) for Intel 8080. While doing that he recognized that the floppy disk would make a good mass storage device for small programs that managed the flow of information to and from a floppy disk. He realized that a disk had several advantages over magnetic or paper tape. First, it was faster. Second, the user could both read and write data on it. Its primary advantage was that a disk had “random” access. Users did not have to run through the entire spool of tape to get at a specific piece of data. To accomplish this, however, required some special programming; something which IBM did in the 1960s for its mainframe computers called Disk Operating System (DOS). However, a personal computer disk operating system had little to do with mainframe operating system. There was no need to schedule and coordinate the jobs of many users. There was no need to “spool” or otherwise direct data to several printers, card punches and tape drives; a personal computer had only a couple of ports to worry about. What was needed was rapid and accurate storage and retrieval of files from a floppy disk. A typical file would, in fact, be stored in a set of fragments, inserted at whatever free space that were available on the disk. The operating systems for personal computer needed to be designed in such a way that it can find these free spaces, put data there, retrieve them later on and then reassemble the fragments (Kildall, 1981).

With this concept, he extended the CP/M operating system for Intel 8080 that can also deal with disk drives. He called this a specialized code, the BIOS – Basic Input/Output System. In 1977, a manufacturer of Altair-clone, IMSAL approached Gary Kildall to use CP/M for its products. Kildall rewrote CP/M in order to incorporate the BIOS for the disk drives. This change standardized the operating system for the Intel-based system for a while. This system allowed the floppy disk as a storage medium and expanded the capabilities of the personal computer in terms of storage of data and programs. By 1977, many microcomputer manufacturers, including MITS, IMSAL and others, were offering8-inch floppy disk drives, mainly manufactured by Shugart Associates with CP/M as the operating system (Veit, 1993).

Despite the increasing popularity of the microcomputers among the computer hobbyists and professionals, they did not appeal to the non-experts and the households. They were still intimidating for most of the non-professionals and novices and there was not much use for the individuals and households. In 1975, one company, Apple Computer was established that changed the microcomputer from being a challenging tool for the computer professionals and hobbyists to a useful personal computer for households and non-expert individuals.

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